The 2025 State Budget introduces significant changes to the Portuguese tax system, with a direct impact on businesses and individuals. We highlight the main changes to Corporate Income Tax (IRC) and Personal Income Tax (IRS):
IRC
- Reduction of the overall rate from 21% to 20%.
- Small and medium-sized enterprises (SMEs) and small mid-caps benefit from a reduction in the rate applicable to the first €50,000 of taxable income, from 17% to 16%.
- Adjustments to the autonomous taxation rates on vehicle expenses, with new acquisition cost brackets.
IRS
- Update of taxable income brackets in 4,62%, without alteration of the general progressive rates.
- Exemption from income tax for productivity and performance bonuses paid in 2025, up to 6% of the annual base salary, provided that the employer has implemented a salary increase of at least 4.7%.
According to the legislative initiatives in question, these measures aim to strengthen business competitiveness and promote wage increases.